- Rates seen steady by 28 of 31 economists polled
- Economy expected to grow at fastest rate in nearly four decades
- Inflation above 2% 'warning' line for four months in a row
- Taiwan's decision to come one day after Fed meeting
TAIPEI, Sept 14 (Reuters) - Taiwan's central bank is expected to hold its policy interest rate steady this week given moderating inflation, according to economists polled by Reuters, but a U.S. rate hike could prompt Taiwan to follow suit.
In June, the central bank left its benchmark discount rate at 2%, as expected. It last raised the rate by 12.5 basis points from 1.875% in March 2024, in anticipation of a rise in electricity prices.
At its next quarterly meeting on Thursday, the central bank is expected to keep the rate unchanged, according to 28 of the 31 economists surveyed. The three dissenting voices saw the central bank raising the rate to 2.125%.
Economists who provided forecasts beyond this week believed the bank would raise the rate to 2.125% at its next quarterly meeting in December, and then keep it there until the end of next year.
Taiwan's tech-centred, export-dependent economy has benefited from the artificial intelligence boom, which has driven orders for companies like TSMC, the world's largest contract chipmaker.
The economy is expected to expand by 11.05% this year, the fastest pace in nearly four decades, the government's statistics agency said last month, after growing 8.68% in 2025.
However, inflation has been above the central bank's 2% "warning" line for four months in a row, and hit 2.04% in August, though that eased from 2.54% in July and came in below a Reuters poll forecast of 2.3%.
Kevin Wang, an analyst at Masterlink Investment Advisory, said that as inflation remained comparatively moderate, Taiwan's central bank does not face pressure to tighten monetary policy.
"Unless the Federal Reserve raises rates first, the central bank is expected to remain on hold at its board meeting," he added.
Taiwan's decision will come one day after the U.S. Federal Reserve's rate announcement.
U.S. consumer prices accelerated in August, while a key measure of underlying inflation posted its largest increase in four months, reinforcing expectations that the Federal Reserve will raise interest rates this week.
Analyst Wang Yu-Hsuan of First Capital Management said a Fed hike this week would "significantly" increase the chance of Taiwan's central bank following suit.
Taiwan's central bank will also unveil its revised economic growth and inflation forecasts for this year, and give its first outlook for next year, on Thursday.
Poll compiled by Susobhan Sarkar and Renusri K in Bengaluru and Carol Lee in Taipei; Reporting by Ben Blanchard and Faith Hung; Additional reporting by Roger Tung; Editing by Sonali Paul
Source: Reuters